* Q1 profit, sales in line with estimates
* Family Dollar comp sales down 1.2 pct vs est 0.1 pct rise
* Shares up 2.5 pct as Dollar Tree comps above estimates
(Adds details from conf call, updates shares)
By Sruthi Ramakrishnan
May 25 Dollar Tree Inc, the biggest
U.S. dollar-store chain operator, reported lower-than-expected
quarterly comparable sales on Thursday, as late tax refunds led
low-income customers to rein in spending at its Family Dollar
Family Dollar reported a surprise 1.2 percent drop in
comparable store sales for the first quarter ended April 29,
compared with the 0.1 percent rise expected by analysts.
Income tax refunds started later this year for low-income
earners due to a new law requiring the Internal Revenue Service
to wait until Feb. 15 to issue refunds related to some kinds of
"They bought what they needed to get by," Chief Executive
Bob Sasser said on an earnings call.
"The difference of what they wanted to buy across
discretionary departments was really what we felt in period
Dollar Tree is not the first retailer to have been affected
by late tax refunds.
Several retailers, including Foot Locker and Citi
Trends, highlighted the impact on their first-quarter
Dollar Tree said overall sales at stores open for more than
a year rose 0.5 percent, below the 0.9 percent increase expected
by analysts polled by research firm Consensus Metrix.
However, the company's shares were up 2.5 percent at $80.22
as investors focused on robust performance at core Dollar Tree
"Our belief is that the core DT comp of 2.5 percent was a
little better than expectations," UBS analyst Michael Lasser
wrote in a note.
UBS had estimated a 2 percent growth, while analysts polled
by Consensus Metrix expected a 1.5 percent rise.
Family Dollar's results are a reminder that it is going to
take time for the business, acquired by Dollar Tree in 2015, to
reach its potential, Lasser said.
Dollar Tree's net income fell 13.8 percent to $200.5
million, or 85 cents per share, largely due to a $50.9 million
The charge was related to the non-payment by Dollar Express
for stores bought from the company.
Dollar Express is in the process of liquidation and is in
default of its obligations, Dollar Tree said.
The prior-year quarter also included a one-time tax rate
benefit of 9 cents per share, the company said.
Excluding items, the company earned 98 cents per share, in
line with the average analysts' estimate, according to Thomson
Net sales rose 4 percent to $5.29 billion, also matching the
average analysts' estimate.
(Reporting by Sruthi Ramakrishnan; additional reporting by Anya
George Tharakan in Bengaluru; Editing by Sriraj Kalluvila)